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Johnson & Johnson Agrees to Pay Up to $60 Million, Including Rebates to Consumers

Tuesday, May 22, 2001

Contact: (415) 703-5837, agpressoffice@doj.ca.gov

(SACRAMENTO) – Attorney General Bill Lockyer announced today that consumers who purchased contact lenses in the last 14 years would be eligible to receive cash rebates on future lens purchases and eye exams under a proposed settlement with Johnson & Johnson Vision Care, Inc.

Johnson & Johnson was the last non-settling defendant in an antitrust action brought by California, 31 other states, and a private consumer class against contact lens manufacturers and the American Optometric Association. Settlements with the American Optometric Association and 13 individual optometrist defendants also received preliminary approval today.

"This has been long, hard-fought litigation for consumers with California's active involvement," Attorney General Lockyer said. "The settlement provides tangible benefits to consumers who use and purchase replacement contact lenses."

Californians who bought replacement contact lenses from Johnson & Johnson, Bausch & Lomb, or CIBA Vision at any time since January 1, 1988, are eligible to receive rebates under the proposed settlement. Acuvue®, SeeQuence®, Focus®, and NuVues® are among the brands sold by these manufacturers.

More than 10 percent of Americans wear contact lenses. Because Johnson & Johnson, Bausch & Lomb and CIBA make the most widely sold brands, most of these consumers are eligible for benefits under the settlement. Eligible consumers may receive benefits both under the proposed settlement with Johnson & Johnson and under a proposed settlement reached with Bausch & Lomb in January.

Today California and the other plaintiffs moved for preliminary court approval of the Johnson & Johnson settlement agreement. The Bausch & Lomb settlement received preliminarily court approval earlier. The settled lawsuits alleged that retail prices of disposable contact lenses were too high because Johnson & Johnson and the other defendant manufacturers agreed with Optometric Association representatives, in violation of the antitrust laws, that their lenses would be available only from eye care professionals (optometrists, ophthalmologists and opticians), retail optical stores or certain mass merchandisers.

Plaintiffs alleged that because of this illegal agreement consumers had more difficulty buying replacement lenses through the mail or from pharmacies. Johnson and Johnson denies participating in the alleged agreement. All the defendant manufacturers claimed their refusals to sell to outlets such as mail order and pharmacies were not the result of an illegal agreement. All defendants also deny that their actions cause retail prices of replacement lenses to be above competitive levels.

Under the proposed settlement, Johnson & Johnson guaranteed to distribute at least $30 million of rebates to consumers. Bausch & Lomb also guaranteed to distribute at least $9.5 million of rebates and coupons. If less than the guaranteed amounts are distributed, each manufacturer agreed to pay into a settlement fund the difference between its guarantee and the amount actually distributed.

The consumer benefits package will include $50 off the purchase of four six packs of disposable lenses and $25 off the cost of an eye examination by an eye care professional plus an additional $25 off a future purchase of four or more lens six packs. Four six packs of lenses can cost consumers anywhere from about $75 to $100 or more.

In addition to offering consumers the benefits package, Johnson & Johnson agreed to pay $25 million in cash into a settlement fund. In prior settlements in the litigation, Bausch & Lomb agreed to pay $8 million in cash and CIBA agreed to pay $5 million. The AOA agreed to pay $750,000 and 13 individuals agreed to pay $8,000 each. Attorneys fees and litigation expenses will be paid out of all these settlement funds and the defendants will not be making additional payments to cover the attorneys fees or other litigation expenses.

For consumers who formerly wore Johnson & Johnson contact lenses but no longer do so, Johnson & Johnson agreed to pay up to $5 million in cash or coupons. Those consumers will have the choice of $35 in cash or $50 in coupons upon filing of an appropriate claim form including proof of a valid prescription for Johnson & Johnson lenses, a receipt showing a purchase after January 1, 1988 or a statement from a patient's eye care practitioner that he or she purchased Johnson & Johnson disposable lenses. A full description of the criteria for payment is contained the notice and claim form. Plaintiffs will seek to establish a similar fund for people who have stopped wearing B&L and CIBA lenses.

Both Johnson & Johnson and Bausch & Lomb agreed to change their distribution practices. The applicable provision in the settlement with Johnson & Johnson provides:

Injunctive Relief: (a) Johnson & Johnson will sell and distribute its replacement contact lenses to alternative channels of distribution (as defined in this Settlement Agreement) for a period of five (5) years from the date this Settlement Agreement becomes final under paragraph 12 hereof. (b) Subject to subparagraph (a) above, Johnson & Johnson will sell to alternative channels of distribution in a commercially reasonable and non-discriminatory manner, provided that any such alternative channel of distribution, like any other authorized account, will sell contact lenses only to consumers based upon a valid prescription and in compliance with all federal and state laws and regulations regarding the sale or dispensing of contact lenses, and agrees not to substitute diagnostic lenses for a revenue-producing product.
Bausch & Lomb similarly agreed to sell to alternative channels of distribution in a commercially reasonable and non-discriminatory manner, provided that the alternative channel accounts meet the same terms and conditions of all other accounts.
Under its settlement, the American Optometric Association agreed not to ask or encourage a contact lens manufacturer to refuse to sell contact lenses to any channel of trade; not to encourage or support a refusal by optometrists, in writing prescriptions, to favor any manufacturer because its lenses are sold by outlets other than eye care professionals; not to claim, without scientific proof, that there is a link between eye health problems and the channel of trade from which contact lenses are purchased; not to oppose consumers getting their contact lens prescriptions on request, except on valid medical grounds and as consistent with state law; and to publish a letter from the AOA's president in the AOA News setting forth these agreements.

Trial of the case against Johnson & Johnson and the AOA began March 19, 2001, in the federal district court in Jacksonville, Florida. Details of the settlement was embargoed until being finalized and approved today.